A recent letter published in the Squamish Chief, called “The FATCA of the Matter”, by Suzanne Herman, must have upset some people with the truth. Not to be outdone, Bill Cavanagh, former Program Manager, Capital Markets, Bank of Montreal has managed to get a counter letter published, titled “The Facts about FATCA”.
Read Mr. Cavanagh’s enlightening facts:
http://www.squamishchief.com/opinion/letters/the-facts-about-fatca-1.932064
Read Ms. Herman’s original letter:
http://www.squamishchief.com/opinion/letters/the-fatca-of-the-matter-1.933164
Update Apr 2, 2014:
MP John Weston responds: http://www.squamishchief.com/opinion/letters/safeguards-lauded-1.939921
@Inside the M25
I wonder if the questions re nationality were a breach of the Equalities Act (2010)?
Certainly questions place or country of birth could be a breach of the Act.
As you probably are aware, our parliament likes to make loads of laws, but most aren’t enforced (such as the Disability Discrimination Act- my experience as a parent of a disabled child) unless you can afford to hire a lawyer to get the law enforced.
@CreatureOutside – Before I searched a website (forgotten) that basically says each customer must be given the same service. How can a bank treat one EU citizen different from another? To avoid the discrimination argument, the Government has to forced into the position that EVERYONE’s data is passed to the IRS or else it’s a non-sense.
With the banks losing banking fees, PPI, and other cases, I believe the financial industry could be ruled against with regard to the implementation of FATCA. What we need is a resident EU citizen ‘carve out’ along with harsh penalties if the banks f**k up passing data to the IRS or compensation in the case of a US tax claim.
Something needs to be done. We pay British taxes, VAT and the whole lot, FATCA is wrong and its scope reduced to Americans holding only a US passport.
@calgary411: I did see some warning language in a UK investment broker brochure about US persons not being allowed to hold non U.S.-domiciled funds. It was only a paragraph and in small print. I completely agree that having some way of stopping ‘U.S. persons’ in IRS-speak from buying mutual funds is a good thing given the unfairness of the tax rates and the distress they cause.
@Edelweiss
I think that it is quite a bad thing that you have had trouble with share dealing, since the U.S. doesn’t have a problem with U.K. shares and I guess that you would need a U.K. broker to get them into an ISA wrapper. That does sound like discriminatory behaviour.
I do not know if you noticed one thing this dingbat said, “In the very near future, you will also see the Canadian tax authority request the Government of Canada to pass a similar act, like FATCA, to capture Canadian taxpayers who are doing the same as the U.S. citizens that are being pursued, namely tax evasion.” But Canada does not have citizen based taxation. It is impossible for a Canadian to evade Canadian taxes (at least tax on ordinary income) when resident in USA.
kermitzii, no we don’t have cbt but both the Liberals (Chrystia Freeland) and the Conservatives have expressed interest in doing more to look into possible hiding of revenue outside of Canada, so new legislation is a possibility. If you read the rhetoric about the economy as we build up to the 2015 election, there is a lot of nonsense about tax evading, off-shore secret bank accounts and whatnot.
Note that in order to not pay Canadian taxes, a non-resident Canadian must sever residency ties with Canada. Part of doing this involves a deemed disposition which can result in a tax liability (“departure tax”). So, a Canadian FATCA, of sorts, could, I suppose, possibly be used to help the CRA ferret out Canadian expats who have not dealt with the departure tax. See: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/lvng-eng.html.
Also, as YogaGirl says, it is just as likely, if not more so, that the target would be resident Canadians involved in genuine offshore tax evasion. The CBC had an interesting segment on this a while back. Also, for kicks, see: http://www.cbc.ca/news/canada/senator-s-husband-put-1-7m-in-offshore-tax-havens-1.1329197
Also, a Canadian FATCA could, I suppose, be used to ferret out expat Canadians who are not paying Canadian taxes, but have not severed their residential ties.
Have looked at many online financial account opening applications in Europe.Pretty easy to see who has hired a FATCA consultant.
What is commonality and what is sticking out?
They all ask nationality.
Most require that you must over 18 and resident. They will not open an account for a non-resident.
Many are asking if you are a dual national. Many define that if you hold a valid passport.
But what is interesting is that a whole lot are NOT asking place of birth. This seems to tell me that some compliance people must be worried that the place of birth question is a violation of EU rules.
One part of the compliance industry IS going to be wrong.
If asking place of birth is lawful and they are not asking then the USA may clamp down on that financial firm.
If it is not lawful someone will launch a suit and get awarded damages. Plus it does not even need to be someone born in the USA, it could be someone born elsewhere who resents it.
Mr. Cavanaugh signed the letter as a Former Program Manager, Bank of Montreal.
I tweeted and e-mailed BMO with a link to this information at Maple Sandbox and invited them to clarify if they agree with Mr. Cavanaugh’s letter.
In addition to the above and thinking of the charter challenge.
The so called leaked document appeared to have a desire to put some distance on asking place of birth.
So in Canada do you have FATCA where the banks can not and will not ask for place of birth because if they do, they are doing that on their own with that separate risk. CRA is distancing itself.
Then its down to self certifying what you are. If a person relinquished under 18 USC and does not declare US as a dual nationality because they do not believe they are a US Citizen, then the issue is in the rear view mirror.
Questions would only be asked if you present account opening ID and it shows US indica.
But again US Citizens who are long term permanent residents are and remain up the creek.
Excellent — thanks, Blaze.
@Blaze, kudos. Me thinks Mr. Cavanagh had no business citing a title with BMO in it and BMO is going to be less than pleased.
Background on Mr. Cavanagh;
http://ca.linkedin.com/pub/bill-cavanagh/12/b02/ba
http://www.zoominfo.com/p/Bill-Cavanagh/764177062
@all. The more I think about this, asking place of birth seems to be the fatal flaw in the FATCA process.
Asking citizenship? OK
Asking Dual Citizenship? OK as its self certifying.
But asking place of birth does not serve a legitimate purpose because you would have been already outed at the citizenship question if you had not relinquished!!!
Further if its lawful to ask place of birth then you should also ask place of birth of parents because that is equally important in the quest for US Indica.
If the intent is to smoke out hiding US Citizens then you MUST ask place of birth of both the person and his/her parents!! Further you then need to ask citizenship of parents!!!
So if you do not ask about status of parents but do ask place of birth then that is discrimination.
Good work, Blaze.
@George: Under existing laws, banks can’t ask for citizenship. The problem is the proposed legislation overrides those laws.
So, what happens if banks begin to ask citizenship? What happens if someone says Eritrean? Iranian? Chinese?
I think if banks start demanding citizenship, we will begin to see an outcry from people born in some of those countries who have not become Canadian citizens.
@George
I know of at least one UK bank that asks (online) about nationality then directs to another question “which country were you born?”
A few months ago, on BBC money box, there was a story about people of Iranian origin that were having their accounts closed. No explanation, just account closed. The banks were defending the action and non-response to the customers based upon supposed anti-money laundering, criminal activity etc. This is now being pursued through the courts by the people affected as a breach of the Equalities Act (2010).
tdott thanks for the insights. I actually lived in the USA for 8 months in 1992 while a resident of Canada (not a citizen yet). I was not a boney-fida emigrant as my wife only came to Seattle later for the last 4 months (but I had the 2 year old the whole time, does that count as an emigration?). Anyway I did not bother to file USA income tax, being in the states for more than 6 months, as this was pre-2011 (kind of rhymes with 911, eh?).
@Blaze, I am thinking in EU terms but looking across the pond to Canada as you are the front line in this. If FATCA cracks because of a charter challenge, the water behind the damn in the EU will gush out.
I keep forgetting that you are facing that absolutely horrid override clause!!!
Much of the problems, though not all, could be eliminated if prior to opening an account you self certified one question. Are you US Resident for tax purposes, including being a US Citizen? Yes/No.
Sole US Citizens or duals who clearly did not relinquish would be up the creek with that question but many others would rightly flow on by.
We have to ask, Did Carl Levin want to trap border babies? I think or hope not.
In the EU and probably Canada, I think part of the problem is an overzealous compliance industry.
@George: I don’t think Carl Levin originally intended to trap border babies–many of whom were born in his home state of Michigan. There are also a a lot of trans-border marriages the Windsor-Sarnia-Port Huron-Detroit area.
Carl Levin and other members of Congress now know how people living outside the US are affected. Yet, they are charging full steam ahead. Levin himself has demanded FATCA information be available upon request to US law enforcement and national security agencies
Levin doesn’t care about Canadian border babies–who may now be Canadian Grandmas and Grandpas. He is vindictive.
@Ann
Yeah – though a friend (parent of the woman who measured me for a tinfoil hat) has become concerned after seeing an article on a”real ” news site (ie not IBS)…
The word is getting out, slowly.
Bill Cavanagh
bill@peerconnect.ca
604-848-8207
http://squamishminorhockey.com/team_staff.php?exec_id=205639&team_id=83567&league_id=3060
If a bank asked if you were a dual citizen and you simply said “no” what are they going to do? Put you in bank jail for lying to them? How would they ever know or find out? It’s completely ridiculous!
George,
The bi-partisan Joint Tax Committee consisting of House and Senate members is fully aware of what is happening to expats as a result of citizenship based taxation and FATCA.
They have yet to take any action and my guess is that they won’t unless the renunciation situation becomes a national embarrassment.
@George – So to get this right. Many banks don’t ask for your place of birth for the online application. What happens if you go into a bank to verify the documents with an EU passport with the place of birth taped over? If they’re not allowed to ask for your place of birth online then they really don’t need that information to open an account?
Could this be a simple opt out for FATCA for dual nationals? If they ask if you’re a dual national just answer NO.
If a bank refuses to open the account because you won’t disclose your place of birth then make a discrimination complaint against them.
Is FATCA going to apply more so to sole US passport holders who have no choice? We as EU citizens have rights and I expect to live in the EU under the same rules as other EU citizens.
Some welcome justice, shunrata.
Congratulations on your CLN!!!